Premium Traders vs. State Of U.P. And 2 Others

Facts

The petitioner, Premium Traders, a dealer in iron and steel, sold TMT bars valued at Rs. 4,16,717/- to M/s. Umar Enterprises. The goods were transported without an e-Way Bill. Consequently, the goods were intercepted, and an interception memo was issued. A detention order under Section 129(1) of the CGST/UPGST Act, 2017, was issued on grounds of absence of e-Way Bill, under-valuation, and the GSTIN number not being mentioned on the invoice, leading to the invoice being deemed bogus. A notice under Section 129(3) was issued to the driver, Sachin Kumar, without a specified date for reply or hearing. The petitioner submitted a reply on 16.03.2022. However, the respondent no.3 passed an order under Section 129(3)(1)(B) without considering the reply or the petitioner's explanation regarding the GSTIN printing issue, and reiterating the initial grounds.

Held

The Court held that the respondent no.3 committed a manifest error of law by not affording any opportunity of hearing to the petitioner, despite the petitioner's attempts to engage and provide explanations. The Court found that the impugned order, passed under Section 129(1)(b) of the CGST/UPGST Act, 2017, was in breach of the principles of natural justice. Consequently, the order dated 14.03.2022, under Section 129 of the CGST/UPGST Act, was quashed. The Court remitted the matter back to respondent no.3 to pass a fresh order in accordance with the law. This fresh order is to be passed after considering the petitioner's reply dated 16.03.2022 and affording the petitioner a reasonable opportunity of hearing. The Court explicitly stated that no opinion was expressed on the merits of the petitioner's case. The respondent no.3 was directed to pass the order within two weeks from the date of submission of a certified copy of this order along with the petitioner's reply.

Key Issues

1. Whether the detention and subsequent order under Section 129 of the CGST/UPGST Act, 2017, are vitiated by a breach of the principles of natural justice, specifically the lack of a reasonable opportunity of hearing afforded to the petitioner? Petitioner's Arguments: The petitioner argued that the notices were issued to the driver with a temporary ID and unknown password, hindering their ability to respond. Despite submitting a reply on 16.03.2022, the respondent no.3 failed to consider it and passed an order without affording a proper hearing. The petitioner also explained that the GSTIN number was not clearly printed on the invoice due to a printer issue, and a clear copy was provided upon interception. The petitioner contended that the order was passed in breach of natural justice. Respondent's Arguments: The respondent's counsel, through instructions from respondent no.3, merely reiterated the order passed under Section 129(1)(b) of the Act, admitting that the invoice was issued by the petitioner but not addressing the procedural lapses.